It pays to behave reasonably in disputes

PUBLISHED: 16:39 07 September 2012 | UPDATED: 21:50 20 February 2013

It pays to behave reasonably in disputes

It pays to behave reasonably in disputes

So thinks Paula Loughlin, Partner and Head of Property Litigation at Davies and Partners Solicitors, and here's why...

It pays to behave reasonably in disputes

So thinks Paula Loughlin, Partner and Head of Property Litigation at Davies and Partners Solicitors, and heres why

It is a fact of life that businesses get involved in disputes which are inevitably an unwelcome drain on time and resources.

If a dispute cannot be resolved, there is a common belief that an aggressive solicitor will get the best results. However, experience shows that an uncompromising approach can often generate conflict and lead to more time and cost for the business in the long run.

This is because the rules and ethos of our civil justice system are designed to encourage parties to settle rather than litigate disputes. Although the court has no power to make parties behave reasonably before proceedings are issued, if proceedings are started, the pre-action behaviour of the parties can be scrutinised by the court and a party may be punished if the court feels they have not cooperated or behaved reasonably.

The Rules of Court include Pre Action Protocols which set out the steps parties should take before proceedings are issued. In summary, these require parties to: send a letter of claim and a letter of response within a reasonable timescale; provide copies of relevant documents; try to reach agreement about the use of expert evidence; show a willingness to negotiate; if necessary use alternative dispute resolution processes (such as mediation); generally make attempts to settle the dispute without the need for court proceedings.

In a recent case a homeowner complained about a noise nuisance caused by an adjoining scrap metal site owner. The scrap metal business endeavoured to negotiate with the homeowner to try to avoid proceedings. However, the homeowner, confident of their claim, issued proceedings for an interim injunction to stop the noise nuisance until the matter could be fully decided at trial.

Although the scrap metal business was obliged to give undertakings to limit its hours of operation and so effectively acknowledged the interim injunction was justified, the court ordered the homeowner to pay the scrap metal business 80% of its costs for the interim injunction proceedings as a punishment for lack of cooperation prior to the start of proceedings.

The homeowner went on to succeed at trial and proved that the scrap metal business had caused an unlawful noise nuisance. Although the homeowner recovered the cost of the proceedings to trial, those earlier costs for the interim injunction were never recovered.

There is no doubt that complying with the Pre Action Protocols can result in substantial time and money being spent before proceedings are even issued. But the courts believe this is preferable, as pre action costs are far less than the cost incurred after proceedings are issued.

All that said, the court also recognises that a party may try to use the Pre Action Protocols as a tactical weapon to waste time and generate costs for the other side - a tactic which can often backfire.

In a recent case a party applied for the proceedings to be put on hold, so the parties could follow the Pre Action Protocol process, which it claimed the other side had not followed. However, the court examined communications between the two parties solicitors and found that the party who claimed that the other side had not complied with the Protocol had in fact behaved unreasonably and was trying to use a technical breach of the Protocol by the other side to get the court to impose a cost penalty on its opponent.

The court saw through this tactic and refused the partys application and instead made a costs order in favour of the other side as punishment.

The court made this decision without any assessment of the actual merits of the claim because it is the behaviour of the parties which the courts are concerned with at the pre-action stage and not whether the claim or defence is justified.

SO, when dealing with a dispute, whatever its merits, it makes real business sense to cooperate with the other side and demonstrate that you have made genuine efforts to try to behave reasonably and resolve the dispute.

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